Australia's Suncorp H1 jumps 74%; tops forecasts

SYDNEY (Reuters)—Australian insurer and bank Suncorp Metway Ltd. reported a 74% rise in first-half net profit, topping forecasts after a rise in premiums helped it recover from 2011's unprecedented disaster claims.

In early 2011, deadly floods and storms rocked the eastern-states of Australia and a devastating earthquake ravaged New Zealand's Christchurch, leading to record insurance claims and rising reinsurance costs.

Analysts estimate that in the six-months to December, premiums have risen 7-10% across the portfolio and 15% for homes, due in large part to the damage seen in the Queensland floods and storms in the previous financial year.

Queensland-based Suncorp said first-half net profit was $389 million Australian dollars ($416 million) compared with AU$223 million a year ago and AU$366 million according to the average forecast from Thomson Reuters I/B/E/S.

The firm announced a dividend of 20 cents, up from 15 cents a year ago.

Credit Suisse Group A.G. insurance analyst Andrew Adams said widening credit spreads due to financial market turmoil had hurt general insurance profits and the lack of capital return was disappointing.

"They keep harping on about how well capitalised they are so we thought maybe at least a 100% payout ratio, so it’s disappointing from that aspect," said Mr. Adams.

"It means we'll probably just have to look into the excess capital a little further to see if we generally believe they've got AU$1.2 billion of excess capital," he added.

Suncorp, which runs the country's fifth largest bank, said it would review its capital return position at the end of the year.

"While capital levels remain well above the Group's targets, we have decided to maintain these surpluses given ongoing global economic uncertainty," said Suncorp chairman Ziggy Switkowski.

Suncorp said that its general insurance net profit of AU$162 million for the first-half of the year was impacted by natural hazard claims that were AU$149 million above allowances for the period.

Suncorp said earlier this year that the damage bill from a hailstorm in Melbourne on Christmas day was expected to cost as much as AU$250 million.

Last year, Suncorp said it expected a 12% underlying insurance margin for the financial year 2012, despite higher reinsurance costs and greater allowances for natural hazard claims.

Suncorp's banking operations recorded a net profit of AU$156 million up from AU$110 million a year ago and said margins had declined slightly to 1.91%.

Suncorp shares have risen 0.6% for the year, compared with 5.8% for the broader benchmark index.